The NFL’s Revenue-Sharing System Fails its Fans

Liam Day wonders: What if any time a team loses a game, they have to pay a losing tax?

A friend of mine posted a New York Times op-ed about teacher accountability on Facebook over the weekend. Later that same day, I came across Jason Whitlock’s column on the sorry state of the Kansas City Chiefs, who were beaten handily on Sunday by the then 1-3 Tampa Bay Buccaneers, and the lack of accountability on the part of the team’s owner to its fan base. So I’m now in the mood to talk about accountability.

Whitlock’s absolutely right. Because of television and merchandising revenue, pro sports franchises are no longer as dependent on gate receipts to sustain themselves. They have, therefore, less incentive to invest in the on-field product. If the television revenue is guaranteed, no matter how bad a team is, why worry about spending on the free-agent market to make it better? This is especially true in the NFL, whose revenue sharing plan is almost socialist.

A system of sharing television revenue among the league’s franchises, no matter the difference in sizes of the teams’ television markets, is the primary reason the league is as competitive as it is. It is one of the reasons that teams like Pittsburgh and Green Bay can consistently rank among the league’s best. It is the reason that nearly half the league’s teams have reached the Super Bowl since the turn of the century.

To see what happens in leagues without such a revenue-sharing mechanism, in leagues that more closely approximate a free-market system, one has only to look to England or Spain, where Barcelona or Real Madrid have won every La Liga championship but four dating back to the 1984-85 season. Pity the fans of poor Sevilla, who have not tasted victory since Generalissimo Franco was a young man, and are not likely to any time soon, at least without a large cash infusion to buy the players it needs to compete with its wealthier competitors.

The NFL’s revenue-sharing system would seem, then, to be the perfect antidote to the inequality so many of the European and South American soccer leagues breed. There is, however, as in all things, a flip side to the equation. For every Pittsburgh or Green Bay there is, as Whitlock points out, a Kansas City, a team mired in mediocrity, whose ownership shows little inclination to improve its product because there is little economic incentive to do so. Whether it wins or loses, the franchise is guaranteed to make a profit.

This is the downside of pure socialism, the moral hazard it creates. What, then, is to be done? If the completely free-market breeds inequality, but socialism lacks the necessary incentives to guarantee investment in a quality product, what is the solution? What incentive can we build into the NFL’s revenue-sharing system so that teams like Pittsburgh and Green Bay can continue their storied traditions, but will insure that the ownership of every team in the league is accountable for putting the best possible product on the field? I would like to offer a modest proposal. The NFL should tax losing.

A losing tax could function in one of two ways. The league could set a time horizon for failure to make the playoffs, say 5 years. If a franchise failed to make the playoffs for five consecutive seasons, it would be charged a tax for every subsequent season it continued to miss the playoffs, even increasing the amount of the tax each year until either the team improved and qualified for the playoffs or the team’s owner sold the franchise.

In case of a sale, tax obligations would be lifted and the playoff clock reset to zero, so to speak. In this way, the system would recognize that teams, even previously successful teams like the Colts, sometimes need room to rebuild, a process that doesn’t always unfold smoothly, as Indianapolis learned last weekend against the Jets, only one week after their thrilling win over the Packers. Young quarterbacks can be erratic.

The other way the NFL might impose such a tax is to place a levy on every ticket a team fails to sell. In other words, if, on any give Sunday, an NFL team fails to sell out at home, it would have to pay a tax. The beauty of structuring the tax in this way is that it would give some control back to fans. Owners would have a financial incentive to entice ticket-buying fans rather than simply resting on their television-generated laurels. Currently, the price for failing to sell out is borne almost solely by fans, who can’t even watch a game that isn’t sold out on television because it will be blacked out in its home market.

Obviously, a losing tax would be a tough sell for Roger Goodell to make to his league’s owners, but I wonder if we were to ask the Kansas City Chiefs’ fans whether they might not think differently. Though misdirected, the frustration some of them have been voicing the past few weeks is a manifestation of a powerlessness they feel in the face of a team owner who cares as much about them as Countrywide Financial cared about the homebuyers it was selling sub-prime mortgages.

About Liam Day

Liam Day has been a youth worker, teacher, campaign manager, political pundit, communications director, and professional basketball player. His poems have appeared at Slow Trains , Apt, and Wilderness House Literary Review. His op-eds and essays have appeared in Annalemma , Stymie, the Boston Globe and Boston Herald. He lives in Boston, where he works as a public health professional. He is the Sports Editor at The Good Men Project. You can follow him on Twitter at @LiamDay7.

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